RPC Group PLC Acquires Maynard & Harris Group Limited

Posted: 16th December 2013 08:38

Summary of the acquisition

RPC Group PLC ("RPC" or the "Group"), Europe's leading supplier of rigid plastic packaging, announces today the acquisition of Maynard & Harris Group Limited ("M&H" or the "Company") for a total deal value of £103.5m (the "Acquisition") from funds advised by Caird Capital LLP and M&H management.

M&H is a major supplier of rigid plastic packaging to the personal care, healthcare and selected food segments, across all blow moulding and injection moulding conversion processes. The Company's business model is focused on high added-value packaging and flexible customer service. M&H offers an exceptionally wide range of personal care standard designs alongside fully customised packaging, supported by high quality decoration capabilities and an extensive in-house tool library.

M&H employs approximately 700 people and sells product predominantly to markets in the UK, mainland Europe and the US as well as further afield. Sales to the UK and mainland Europe are made from the Company's principal manufacturing site in Beccles, UK. M&H is also enjoying a growing presence in the US market from its manufacturing site in Winchester, Virginia, where it is successfully replicating its business model.
RPC has funded the Acquisition entirely from existing debt facilities.

Rationale for the transaction

M&H will operate as an independent business within RPC's Bramlage cluster and will enhance the Group's leading personal care product offering in the UK, mainland Europe and the US. The Acquisition is a good strategic fit with RPC and offers significant benefits for the Group, including:
  • Complementing RPC's existing strong presence in European rigid plastic personal care packaging
  • Creating a stronger platform for the Group in the US operating from two manufacturing sites with total enlarged group US turnover of circa $84m (note 1)
  • Extending the Group's product ranges to include flexible tubes and an industry-leading range of personal care packaging for short production runs as well as over-the-counter healthcare container designs
  • Pre-tax purchasing synergies of at least £1m are expected to be realised within the first full year of ownership with additional commercial and working capital synergies to be achieved going forward
Deal value and financial effects of the transaction (note 2)

The value of the Company's gross assets which are the subject of the Acquisition was £65.8m as at 30 April 2013, the latest date at which audited consolidated accounts are available for M&H. For the year ended 30 April 2013 M&H generated revenue of £76.7m with an adjusted operating profit before the deduction of depreciation and goodwill amortisation ("EBITDA") of £13.9m.

Unaudited management accounts for the last 12 months to October 2013 show revenues of £80.0m and an adjusted EBITDA of £15.5m. RPC management expects M&H to achieve pro forma EBITDA of £15.9m (pre-synergies) for the year ending 30 April 2014. The total deal value of £103.5m represents a pro forma EBITDA multiple of 6.5x the anticipated outturn for the current year.

Included in the total deal value of £103.5m, certain members of the Company's management team have entered into cross options in respect of their shares. These options give management the right to dispose of their shares as well as RPC the right to acquire the shares at a pre-agreed price, and as a consequence the members concerned are expected to sell their shares in M&H to RPC in the summer of 2014.

The Acquisition is expected to be significantly earnings enhancing for the Group in the next financial year ending 31 March 2015.

David Duffield, M&H's Chief Executive Officer, will continue to lead the M&H management team going forward.
Pim Vervaat, Chief Executive of RPC, commented:

"Following the announcement of 'Vision 2020' in November, the acquisition of M&H represents an important step in realising RPC's strategy of selective consolidation in Europe and the creation of a meaningful presence outside of Europe.

M&H is a well-established and highly respected business which has a good strategic fit with RPC. It operates in our core geographic and product markets and complements the Group's existing market positions very well.

M&H's growing business in the US offers the Group a stronger platform from which to invest in profitable growth going forward. I look forward to working with David and the management team in taking M&H to the next stage of its strategic development."

David Duffield, Chief Executive Officer of M&H, commented:

"M&H is a high quality business that is well positioned for growth. Within RPC the Company will be best placed to enhance its product and service offering and take full advantage of the opportunities for growth that exist in Europe and North America.

A good cultural fit exists in the way in which RPC and M&H operate and this will form a strong foundation for future success. The management team are delighted to be joining RPC."

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